A Victoria stock trader, who was charged for participating in a US$200 million fraud case in the mid 2000, was taken into custody to be committed for extradition to the United States this week, as ordered by a B.C. Supreme Court Judge in a Vancouver courtroom.
Colin Jeffrey Heatherington was a stock trader at Absolute Capital Management Holdings Limited (ACMH) from 2004 to 2008, and allegedly took part in numerous cross-trades of penny stock companies which eventually caught the attention of American securities regulators.
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Penny stocks are low-priced securities of very small companies, typically traded on the ‘over-the-counter’ market, rather than on a national exchange.
U.S. authorities allege Heatherington was involved, along with others, in a cross-trading scheme — manipulating and artificially inflating the price of the securities of 11 American penny stock companies. The securities were handled by eight offshore hedge funds — the Absolute Funds — which ACMH was the investment manager and Heatherington regularly executed the cross-trades.
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According to U.S. authorities, the cross-trading within the Absolute Funds gave the impression that the penny stocks were performing well in the market and that Heatherington and others received inflated profits by way of investments, trading fees and commissions.
According to the ruling, Absolute Funds lost at least $200 million, while Heatherington and his co-conspirators profited by at least US$11.6 million.
Heatherington claims he didn’t intentionally manipulate the stock market or that anyone was intentionally deprived, stating the allegations are too generalized in an effort to ensnare him, suggesting this is due to the fact that the man mainly responsible cannot be extradited from his native Germany.
Counsel for Heatherington asserts he only played a minor role as a stock trader in a complex scheme that was directed by other people.
“The test is whether a reasonably instructed jury could convict Heatherington, not whether it would convict him,” stated the judge.
The federal justice minister must now decide whether to order Heatherington surrendered for extradition.
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